Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:

Which of the following analysis is included in the common size statement analysis of a company?
A) Common size balance sheet
B) Common size income statement
C) Horizontal analysis
D) Vertical analysis

Options:

AB

ABC

ABD

ABCD

Correct Answer:

AB

Explanation:

Common Size Statements (Vertical Analysis): In this approach, each item on the financial statement is expressed as a percentage of a common base, typically a key figure such as total revenue or total assets. By using percentages, it becomes easier to compare the relative proportions of different items within a single period or between different companies.
* Vertical analysis is the another name for the analysis made through the common size statements.